Callable bond- maintain or take loss?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Sandie
Posts: 10
Joined: Thu May 31, 2018 3:37 am

Callable bond- maintain or take loss?

Post by Sandie » Thu May 31, 2018 4:04 am

In 2015 I turned my IRA of 94,000 over to financial adviser who Invested $35 and $20,000 of it in 2 callable CDs, mature in 2025 and 2030. Today, yielding 0% percent interest and value has dropped $15,000. When asking advisor about drop in value, he kept saying just wait they will call it. Went to another investor- He felt at zero percent interest with drop in value, he foresaw no reason that bank would call it—stating they have nothing to loose and all to gain. This second advisor suggested 2 options to leave until maturity date or take loss with “hope” to recover/break even in “maybe” 7 years. Second advisor also said we could just take out a portion and not all of it. Both FDIC insured, but I now question if full amount would be recovered if bankruptcy occurred. Retired, age 65 and not “currently” in need of this money. Should I leave in or take loss and reinvest.

Grt2bOutdoors
Posts: 19324
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Callable bond- maintain or take loss?

Post by Grt2bOutdoors » Thu May 31, 2018 8:40 am

What kind of cd offers a 0% interest rate? This must be a zero coupon cd that will pay at maturity. We need more information, is it a bond, is it a CD what are the exact terms of it. Why would you invest in a security that pays 0%?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

inbox788
Posts: 5659
Joined: Thu Mar 15, 2012 5:24 pm

Re: Callable bond- maintain or take loss?

Post by inbox788 » Thu May 31, 2018 1:21 pm

What dropped $15,000?!? Makes no sense. Looks like you need a new advisor ASAP. Or just drop it all in VTINX ( Vanguard Target Retirement Income Fund ).

http://quotes.morningstar.com/chart/fun ... 2%3A955%7D

Do you understand Callable CD's? I don't. But, I believe if you hold it to maturity, you would be better off than if you had put it in a lower interest 10/15 year CD, and if it gets called, you do ok too, unless CD rates have dropped a whole lot. With interests rates rising, I don't see the benefit to the issuer to call it.
callable CDs give the issuer a great deal of control over the investors’ money
http://www.registerednursern.com/callab ... f-deposit/

How are Advisor 1 and Advisor 2 being paid?

Sandie
Posts: 10
Joined: Thu May 31, 2018 3:37 am

Re: Callable bond- maintain or take loss?

Post by Sandie » Mon Jun 11, 2018 4:42 pm

Correction, we have two callable bank CDs (not Bonds) and they are FDIC insured. They were purchased in 2015. Bank A for $21,470.50 matures 8/26/2030 and one at Bank C for $35,000, matures 1/30/2035. At time of purchased they paid 10%. We took money from a Traditional IRA we started late in life. We thought we'd go with a local investor as many of our friends switched their IRAs to local people. This advisor was used by a business I worked and a friend and came highly recommended. He spoke as if bonds would be called within 4 or 5 years, not emphasizing the maturity date if investment went bad. Within a year interest dropped and value dropped. In mid 2015, several times we asked about cashing in and advisor kept saying they would call them. For past year CD in Bank A is 0% and value is now $15,438.75. Bank C also has paid nothing this year and at 0% interest with value now $22,050.00. We switched to another advisor. Advisor says he's not receiving income from these CDs. Current advisor said we could leave in or he can try to recoup money, but it would take several years, possibly 10 years to recoup over $17,000 from these two investments. So we have decision to make. I tend to agree with comment - "what incentive does a bank have to call a CD" after they have lowered interest rate to zero and keep lowering value? I thank ALL of you very much for your comments!
Last edited by Sandie on Mon Jun 11, 2018 5:22 pm, edited 1 time in total.

Sandie
Posts: 10
Joined: Thu May 31, 2018 3:37 am

Re: Callable bond- maintain or take loss?

Post by Sandie » Mon Jun 11, 2018 5:12 pm

Per link given above for Bogleheads.org site posting suggestions, here's following FYI:

Emergency funds: Yes we have 3-6 months.
Debt: Yes, we have a home mortgage of $50,000 w/ $700 mth pmt
Tax Filing Status: Married Filing Jointly
Tax Rate:
State of Residence:SC
Age:64
Current Asset allocation: Bank Deposits 3.6%, Corp Bonds 13.7% Municipal Bonds 23.3% and the above two CDs are 43.3%, Alternative Investment (REIT Grocery Center) 15.8%

123
Posts: 3827
Joined: Fri Oct 12, 2012 3:55 pm

Re: Callable bond- maintain or take loss?

Post by 123 » Mon Jun 11, 2018 5:36 pm

After scratching my head for awhile over these CDs it sounds like they might be zero coupon CDs. With zero coupon CDs you buy them at a discount and then at maturity you collect the face value of the CD. If there are changes in interest rates along the way the current value of the CD can vary quite a bit, particularly if the maturity date is a long ways out, like with these two CDs. Zero coupon CDs are often sold through brokerages and financial advisers since there is potential for significant markup.

For the Bank A CD purchased for $21,470.50 maturing 8/26/2030 what is the value at maturity?

For the Bank C CD purchased for $35,000.00 maturing 1/30/2035 what is the value at maturity?
The closest helping hand is at the end of your own arm.

stlutz
Posts: 4786
Joined: Fri Jan 02, 2009 1:08 am

Re: Callable bond- maintain or take loss?

Post by stlutz » Mon Jun 11, 2018 5:55 pm

Does your statement have the Cusip number for these CDs? One of us might be able to look up more details on them as something sounds very off.

Sandie
Posts: 10
Joined: Thu May 31, 2018 3:37 am

Re: Callable bond- maintain or take loss?

Post by Sandie » Mon Jun 11, 2018 6:48 pm

Our first statement in for Feb 1,2015 - Feb 28, 2015 shows following:

Bank A callable CD purchased 2/10/15 Quantity 23,000 Price 93.35 Paid $21,470.50
Due 08/26/2030 Solicited Callable 2/26/2015 at 100.000 Int 263.62
Market Price 89.51 Market Value $20,010.00

Bank C callable CD purchased 2/9/15 Quantity 35,000 Price 100.00 Paid $35,000.00
Due 01/30/2035 Solicited Callable 01/30/2017 at 100.000 Int $320.62
Market Price 87.00 Market Value $31,328.50



Jan 2016 statement reflects: Bank A Market Price .88 Value 20,240.00
Bank C Market Price .91 Value 31850.00
Feb 2017 statement reflects: Bank A Market Price .7755 Value 17,836.50
Bank C Market Price .735500 Value 25,742.50
Feb 2018 statement reflects: Bank A Estimated Price .6625 Value 15,237.50
Bank C Estimated Price .63 Value 22,050.00

Sandie
Posts: 10
Joined: Thu May 31, 2018 3:37 am

Re: Callable bond- maintain or take loss?

Post by Sandie » Mon Jun 11, 2018 6:54 pm

First statement dated Feb 1-28, 2015: Bank A 06051VTX4 Bank C 48125TU37

MrTom
Posts: 23
Joined: Fri Jan 16, 2015 4:36 pm

Re: Callable bond- maintain or take loss?

Post by MrTom » Mon Jun 11, 2018 7:52 pm

You only have a loss if you sell before the maturity date. The "loss" you are seeing is because that is what the market is willing to pay for it if you tried to sell it before maturity. So if you hold onto it, you will eventually get your initial deposit back. Actually, slightly more on the first one because you paid less than the par value.

This is an odd product because it's not a standard cd where you have some set interest rate. The interest rate can vary between 0-9% except for the first four initial coupons where you were guaranteed 9%. After that the interest is "Linked to the Difference between the 30- Year and the 2-Year U.S. Dollar Constant Maturity Swap Rates"

Here's the prospectus: https://www.investmentctr.com/assets/co ... august.pdf
Last edited by MrTom on Tue Jun 12, 2018 10:48 am, edited 1 time in total.

Grt2bOutdoors
Posts: 19324
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Callable bond- maintain or take loss?

Post by Grt2bOutdoors » Mon Jun 11, 2018 7:55 pm

I hate structured securities - they make them complicated for a reason. If you can’t spell it out in 5 words, you shouldn’t buy it.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

MrTom
Posts: 23
Joined: Fri Jan 16, 2015 4:36 pm

Re: Callable bond- maintain or take loss?

Post by MrTom » Mon Jun 11, 2018 7:58 pm

I can't find any information on the other one, but I would assume its another similar structured product. The first one was at least structured so that you can't lose your original principal if you hold it to maturity, but that may or not be the case for the other.

poiuytr4
Posts: 3
Joined: Tue Apr 18, 2017 10:37 am

Re: Callable bond- maintain or take loss?

Post by poiuytr4 » Tue Jun 12, 2018 1:54 pm

As MrTom said, they are structured products. They both had fixed rates for the first year and then a coupon that resets quarterly based on a formula that is linked to the difference between the 30- Year (USISDA30) and the 2-Year (USISDA02) U.S. Dollar Constant Maturity Swap Rates.

The good news is that if they are FDIC insured, you will eventually get your money back. Also, they both have Survivor's Put Option, so if you die before they mature, they are payable in full at par.
The bad news is that they are currently trading more like zero coupon CDs and I can not think of a scenario in which they will be called. If the coupon remains zero and you hold on to them until maturity they have a yield slightly over 3.5% given the current market price. Both need the 30-2 spread to be greater than 0.875% to have a coupon, but the spread is currently 0.236%. It is likely that they will pay interest again at some point as the 30-2 spread over the past 20 years has ranged from 0% to a little over 3.5%, so your actual yield should be slightly higher.

The first one uses the following formula to determine the coupon 4*(USISDA30-USISDA02-0.875%).
The second one is even more complicated as it has a formula that changes. It is currently 5.000*(USISDA30-USISDA02)-4.375%, but in 2021 is becomes 6.000*(USISDA30-USISDA02)-5.250%, in 2026 it becomes 7.000*(USISDA30-USISDA02)-6.125%, and in 2031 it becomes 10.000*(USISDA30-USISDA02)-8.750%.

USISDA02's current rate is 3.010%
USISDA30's current rate is 2.774%

Valuethinker
Posts: 36350
Joined: Fri May 11, 2007 11:07 am

Re: Callable bond- maintain or take loss?

Post by Valuethinker » Tue Jun 12, 2018 4:09 pm

Sandie wrote:
Thu May 31, 2018 4:04 am
In 2015 I turned my IRA of 94,000 over to financial adviser who Invested $35 and $20,000 of it in 2 callable CDs, mature in 2025 and 2030. Today, yielding 0% percent interest and value has dropped $15,000. When asking advisor about drop in value, he kept saying just wait they will call it. Went to another investor- He felt at zero percent interest with drop in value, he foresaw no reason that bank would call it—stating they have nothing to loose and all to gain. This second advisor suggested 2 options to leave until maturity date or take loss with “hope” to recover/break even in “maybe” 7 years. Second advisor also said we could just take out a portion and not all of it. Both FDIC insured, but I now question if full amount would be recovered if bankruptcy occurred. Retired, age 65 and not “currently” in need of this money. Should I leave in or take loss and reinvest.
The complexity alone would make me want to take my losses, get out and move on.

Otherwise this will sit there causing you mental pain for likely the rest of your life.

We've all made money mistakes. It is usually best to take your losses and move on.

MrTom
Posts: 23
Joined: Fri Jan 16, 2015 4:36 pm

Re: Callable bond- maintain or take loss?

Post by MrTom » Tue Jun 12, 2018 10:22 pm

Hopefully not for the rest of his life... it's only 7 years for the first one.

its BoA and Chase, so i don't think you are at considerable risk of them going bankrupt (obviously we've learned anything can happen though...)

it's definitely a tough one. If you cut and run, you have a fairly substantial loss which will be difficult to recover under the best market conditions. If you stay, you will eventually come out ahead. As poiuytr4 pointed out, right now it's paying 0%, but that probably won't be true for the entire duration, and it cannot fall below 0%.

If it was my money, and i knew i didn't need access to it prior to the maturity dates, i would leave it be. it was a mistake to get into it, but the cost of getting out a few years early is too high. otherwise you are looking at an immediate ~30-40% loss.... and because it's inside an IRA you can't even use that loss to offset other gains under most circumstances.

Another way to think about it... The second advisor thinks he "might" be able to break even in 7 years... or you can just wait 7 years and be essentially guaranteed to do better than break even.

User avatar
Tyler Aspect
Posts: 1088
Joined: Mon Mar 20, 2017 10:27 pm
Location: California
Contact:

Re: Callable bond- maintain or take loss?

Post by Tyler Aspect » Wed Jun 13, 2018 1:14 am

I think it makes sense to stay put with these factors in play. The choices are to sell now and receive a big loss, versus waiting and eventually getting your principle back. The yield may even rise above 0%. The best scenario would be for the bank to call back the CD when the economy really heats up.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

Sandie
Posts: 10
Joined: Thu May 31, 2018 3:37 am

Re: Callable bond- maintain or take loss?

Post by Sandie » Wed Jun 13, 2018 1:44 am

Thanks everyone. I appreciate the time from everyone to respond.

Sandie
Posts: 10
Joined: Thu May 31, 2018 3:37 am

Re: Callable bond- maintain or take loss?

Post by Sandie » Wed Jun 13, 2018 1:59 am

Someone noted wait of 7 years. Yikes! I gave wrong maturity dates! BAnk of Amer matures 8/26/2030 and JP Morgan Chase matures 1/30/2035. I thought economy was doing better this year, but not based on these investments :(

TBillT
Posts: 426
Joined: Sat Sep 17, 2011 1:43 pm

Re: Callable bond- maintain or take loss?

Post by TBillT » Wed Jun 13, 2018 12:21 pm

I am confused who got the 9% dividend.
But I would look at the growth/or loss of money to date to me. (Principal+Interest ) vs. orig purchase price.
If I was breaking even, and could sell easily, then I would.
But I am not sure it is easy to sell these special structured investments.

GuyInFL
Posts: 121
Joined: Thu Aug 04, 2016 7:17 pm

Re: Callable bond- maintain or take loss?

Post by GuyInFL » Wed Jun 13, 2018 3:45 pm

Looks like 20-year Treasuries were going for 2.2% when these were issued. As long as interest rates fell, it made sense for the bank to call them. I guess the broker expected the trend to continue.

MotoTrojan
Posts: 2471
Joined: Wed Feb 01, 2017 8:39 pm

Re: Callable bond- maintain or take loss?

Post by MotoTrojan » Wed Jun 13, 2018 4:09 pm

Sandie wrote:
Mon Jun 11, 2018 5:12 pm
Per link given above for Bogleheads.org site posting suggestions, here's following FYI:

Emergency funds: Yes we have 3-6 months.
Debt: Yes, we have a home mortgage of $50,000 w/ $700 mth pmt
Tax Filing Status: Married Filing Jointly
Tax Rate:
State of Residence:SC
Age:64
Current Asset allocation: Bank Deposits 3.6%, Corp Bonds 13.7% Municipal Bonds 23.3% and the above two CDs are 43.3%, Alternative Investment (REIT Grocery Center) 15.8%
Nobody else catch that this is 43% of portfolio at 64 years old? Why equity exposure other than REIT? No other assets? Expense estimate in retirement?

MrTom
Posts: 23
Joined: Fri Jan 16, 2015 4:36 pm

Re: Callable bond- maintain or take loss?

Post by MrTom » Wed Jun 13, 2018 4:17 pm

MotoTrojan wrote:
Wed Jun 13, 2018 4:09 pm
Nobody else catch that this is 43% of portfolio at 64 years old? Why equity exposure other than REIT? No other assets? Expense estimate in retirement?
Ugh. I did miss that unfortunately. And the maturity date being even longer than originally mentioned makes it even worse. :oops:

goblue100
Posts: 697
Joined: Sun Dec 01, 2013 10:31 am

Re: Callable bond- maintain or take loss?

Post by goblue100 » Wed Jun 13, 2018 4:26 pm

I wonder what the commission was on these callable cds?
Can't take it with you when you're gone | But I want enough to get there on - Rollin with the flow - Jerry Hayes

MotoTrojan
Posts: 2471
Joined: Wed Feb 01, 2017 8:39 pm

Re: Callable bond- maintain or take loss?

Post by MotoTrojan » Wed Jun 13, 2018 5:25 pm

MrTom wrote:
Wed Jun 13, 2018 4:17 pm
MotoTrojan wrote:
Wed Jun 13, 2018 4:09 pm
Nobody else catch that this is 43% of portfolio at 64 years old? Why equity exposure other than REIT? No other assets? Expense estimate in retirement?
Ugh. I did miss that unfortunately. And the maturity date being even longer than originally mentioned makes it even worse. :oops:
Indeed. OP I think a larger post about your overall retirement plan would be in order.

Sandie
Posts: 10
Joined: Thu May 31, 2018 3:37 am

Re: Callable bond- maintain or take loss?

Post by Sandie » Thu Jun 14, 2018 3:27 am

Re holding CDs to maturity: Am I looking at this right? in 6 years, at age 70 1/2 I see where one is required to start withdrawing from IRA. I found online calculator and entered estimate portfolio at $85,000 w/age at age 64 today. Said I would need to withdraw around $3,000 year. Is this estimate correct?

If so, In order to hold these two low to zero yielding CDs of $55,000 to maturity in 2030 & 2035, the $3,000 annual withdrawal at age 70 1/2 must come from the current $40,000 investments (currently yielding interest (3-6.5%).

Valuethinker
Posts: 36350
Joined: Fri May 11, 2007 11:07 am

Re: Callable bond- maintain or take loss?

Post by Valuethinker » Thu Jun 14, 2018 4:36 am

Sandie wrote:
Thu Jun 14, 2018 3:27 am
Re holding CDs to maturity: Am I looking at this right? in 6 years, at age 70 1/2 I see where one is required to start withdrawing from IRA. I found online calculator and entered estimate portfolio at $85,000 w/age at age 64 today. Said I would need to withdraw around $3,000 year. Is this estimate correct?

If so, In order to hold these two low to zero yielding CDs of $55,000 to maturity in 2030 & 2035, the $3,000 annual withdrawal at age 70 1/2 must come from the current $40,000 investments (currently yielding interest (3-6.5%).
Is there any way you can get compensation for this "advice"? The product sold to you was clearly inappropriately sold given your age and needs.

It's such a huge fraction of your retirement savings that just "taking the pain" is probably not the right answer, but conversely this thing is just sitting there, and will do for another 12 and 17 years, most likely.

User avatar
oldcomputerguy
Posts: 3452
Joined: Sun Nov 22, 2015 6:50 am
Location: In the middle of five acres of woods

Re: Callable bond- maintain or take loss?

Post by oldcomputerguy » Thu Jun 14, 2018 5:28 am

Sandie wrote:
Thu Jun 14, 2018 3:27 am
Re holding CDs to maturity: Am I looking at this right? in 6 years, at age 70 1/2 I see where one is required to start withdrawing from IRA. I found online calculator and entered estimate portfolio at $85,000 w/age at age 64 today. Said I would need to withdraw around $3,000 year. Is this estimate correct?
Yep, that looks about right.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

dash1s
Posts: 26
Joined: Thu Feb 08, 2018 8:42 pm

Re: Callable bond- maintain or take loss?

Post by dash1s » Thu Jun 14, 2018 7:51 pm

Valuethinker wrote:
Thu Jun 14, 2018 4:36 am
Is there any way you can get compensation for this "advice"? The product sold to you was clearly inappropriately sold given your age and needs.

It's such a huge fraction of your retirement savings that just "taking the pain" is probably not the right answer, but conversely this thing is just sitting there, and will do for another 12 and 17 years, most likely.
Is there any sort of recourse in this situation?

As everyone pointed out, the product was inappropriate for a retail investor --- primarily given the % of the overall portfolio, the duration and investor's proximity to retirement. Imagine the commissions were lucrative which would support the case.

123
Posts: 3827
Joined: Fri Oct 12, 2012 3:55 pm

Re: Callable bond- maintain or take loss?

Post by 123 » Thu Jun 14, 2018 9:00 pm

It seems to me that a case could be made that the CDs were not appropriate investments for the OP because the maturity date of the CD was beyond the point at which the OP is required to take RMDs.

If one wanted to raise that issue it might be possible to contact the compliance department of the brokerage firm that the selling financial adviser was associated with and request that the firm remedy the inappropriate sale by reversing the transactions and refunding the amounts paid by the OP.
The closest helping hand is at the end of your own arm.

Sandie
Posts: 10
Joined: Thu May 31, 2018 3:37 am

Re: Callable bond- maintain or take loss?

Post by Sandie » Thu Jun 14, 2018 9:11 pm

I hope it is all right to mention Institutional names on this blog. Financial advisor firm was JP Turner and they switched to Centarius- it w/b the compliance Dept of JP Turner whose is no longer associated with that financial advisor. I also switched advisors for these CDs—thought was to let him reinvest; however, value seems too low now to reinvest.

nyclon
Posts: 307
Joined: Fri Oct 02, 2015 5:30 pm

Re: Callable bond- maintain or take loss?

Post by nyclon » Thu Jun 14, 2018 9:22 pm

Sandie wrote:
Thu Jun 14, 2018 9:11 pm
I hope it is all right to mention Institutional names on this blog. Financial advisor firm was JP Turner and they switched to Centarius- it w/b the compliance Dept of JP Turner whose is no longer associated with that financial advisor. I also switched advisors for these CDs—thought was to let him reinvest; however, value seems too low now to reinvest.
Yikes JP Turner shut down due to complaints: https://www.thestreet.com/story/1324920 ... tdown.html

dash1s
Posts: 26
Joined: Thu Feb 08, 2018 8:42 pm

Re: Callable bond- maintain or take loss?

Post by dash1s » Thu Jun 14, 2018 9:26 pm

Sandie wrote:
Thu Jun 14, 2018 9:11 pm
I hope it is all right to mention Institutional names on this blog. Financial advisor firm was JP Turner and they switched to Centarius- it w/b the compliance Dept of JP Turner whose is no longer associated with that financial advisor. I also switched advisors for these CDs—thought was to let him reinvest; however, value seems too low now to reinvest.
Bingo. Thanks for posting that. Quick google led to the below. There is a lot more shady stuff that pops up in google associated that name. No legal background so Idk what recourse you have. Maybe someone else might know.

https://www.thestreet.com/story/1324920 ... tdown.html

NEW YORK (TheStreet) -- Management of J.P. Turner Associates, a small Atlanta-based brokerage that sports 37 fines, censures, arbitrations and injunctions on its regulatory record, said in late July that the firm will shut its doors this fall.

InvestmentNews first reported that Larry Roth, CEO of Cetera Financial Group, a brokerage network that includes Turner, said it was "winding down" Turner's operations.

It's a win for the investing public, although it does come with some caveats.

When it came to violating securities laws, Turner was a doozy. In recent years, three of its managers -- counting the firm's former president -- were suspended or barred from the business by regulators. One supervisor was suspended from acting as a principal for two months when it came to light that a rogue broker under his charge had done 335 unsuitable mutual fund switches in the accounts of 54 customers.

https://www.thestreet.com/story/1293707 ... orsch.html

In just over two years, three managers -- ranking as high as the firm's president -- have been suspended or barred by securities regulators. In September 2012, the Securities and Exchange Commission fined and suspended J.P. Turner's co-founder and president William Mello from acting as a supervisor for five months. In a related case, its former head of supervision, Michael Bresner, was permanently barred last December from working at any broker-dealer as a supervisor. An administrative law judge overseeing the case described Bresner's misconduct as "recurrent and egregious."

That same judge wrote that three former Turner brokers had "recklessly disregarded" their customers' conservative investment objectives. The brokers lost $2.7 million in customer money while generating $845,000 in fees and commissions, according to the SEC. The SEC's case against the three is on appeal.
Last edited by dash1s on Thu Jun 14, 2018 9:32 pm, edited 1 time in total.

123
Posts: 3827
Joined: Fri Oct 12, 2012 3:55 pm

Re: Callable bond- maintain or take loss?

Post by 123 » Fri Jun 15, 2018 12:27 am

I checked the FINRA site for JP Turner and they have a substantial history of regulatory problems and "issues" https://files.brokercheck.finra.org/firm/firm_43177.pdf

It would seem that contact with FINRA might be appropriate if the OP wants guidance on any complaint process.
The closest helping hand is at the end of your own arm.

Sandie
Posts: 10
Joined: Thu May 31, 2018 3:37 am

Re: Callable bond- maintain or take loss?

Post by Sandie » Sun Jul 01, 2018 11:19 am

Thank you all for input. My concern is in about 6 years, at 70 1/2, I must start withdrawing from IRA. Should I draw from these “currently” non-interesting bearing and declining two CDs or other investments? For those who calculate well, how much a year do I have to withdraw and how many years will my IRA last. My current total IRA is now about 89,000.

poiuytr4
Posts: 3
Joined: Tue Apr 18, 2017 10:37 am

Re: Callable bond- maintain or take loss?

Post by poiuytr4 » Fri Jul 06, 2018 1:27 pm

Sandie wrote:
Sun Jul 01, 2018 11:19 am
Thank you all for input. My concern is in about 6 years, at 70 1/2, I must start withdrawing from IRA. Should I draw from these “currently” non-interesting bearing and declining two CDs or other investments? For those who calculate well, how much a year do I have to withdraw and how many years will my IRA last. My current total IRA is now about 89,000.
I would use Schwab's RMD calculator to get the exact figures. But, you will need to withdraw about between $3,250 and $4,400 per year depending on the growth of the IRA. The RMD's are based on the account balance and the life expectancy, so they will last until you are 115 years old. But by that time the RMD is significantly smaller.
https://www.schwab.com/public/schwab/in ... lators/rmd


The answer to if you should sell these CDs or sell other investments to fund the RMD's is a question that needs more information. You stated that you are not “currently” in need of this money, but will you be in 6 years? What are your expenses, income, and are there other assets outside of this IRA?
The only good news is that in 6 years both CDs should have increased in value as they are closer to maturity.

User avatar
sergeant
Posts: 934
Joined: Tue Dec 04, 2007 11:13 pm

Re: Callable bond- maintain or take loss?

Post by sergeant » Fri Jul 06, 2018 1:45 pm

OP, you are a victim of some shady characters that placed you in instruments that only benefited them.
The good news is that other than file a complaint with FINRA you don't have to be in a super hurry to do anything. Please answer the questions about other assets and income streams. It might be better to start a new thread asking for help with your entire portfolio. I'm sorry you were taken advantage of.
Lincoln 3 EOW!

Post Reply